Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
Smaller reporting company
Emerging growth company
If an emerging company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ý No ¨
As of August 1, 2019, the registrant had 17,029,502 outstanding shares of common stock consisting of: (i) 14,352,052 shares of Class A common stock; (ii) 2,677,450 shares of Class B common stock in addition to 2,742,416 Series 1 warrants and 375,885 Series 2 warrants.
Accounts receivable, less allowance for doubtful accounts of $3,872 and $5,483 at June 30, 2019 and December 31, 2018, respectively
Assets held for sale
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Other intangible assets, net
Liabilities and Stockholders’ Equity
Accounts payable and accrued expenses
Current portion of operating lease liabilities
Current portion of term loan
Total current liabilities
6.75% senior notes, net of debt issuance costs of $7,332 at June 30, 2019
Operating lease liabilities
Deferred income taxes
Commitments and contingencies (Note 14)
Class A common stock, par value $0.0000001 per share; 100,000,000 shares authorized; 14,363,242 and 12,995,080 shares issued;14,328,538 and 12,995,080 shares outstanding at June 30, 2019 and December 31, 2018, respectively
Class B common stock, par value $0.0000001 per share; 100,000,000 shares authorized; 2,696,853 and 3,560,604 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
Treasury stock, at cost, 67,833 shares at June 30, 2019
Total stockholders’ equity
Total liabilities and stockholders’ equity
See accompanying notes to the unaudited condensed consolidated financial statements.
1. Nature of Business, Interim Financial Data and Basis of Presentation
Cumulus Media Inc. (and its consolidated subsidiaries, except as the context may otherwise require, “CUMULUS MEDIA,” “we,” “us,” “our,” or the “Company”) is a Delaware corporation, organized in 2018, and successor to a Delaware corporation with the same name that had been organized in 2002.
Nature of Business
CUMULUS MEDIA is a leading audio-first media and entertainment company delivering premium content to over a quarter billion people every month - wherever and whenever they want it. CUMULUS MEDIA engages listeners with high-quality local programming through 428 owned-and-operated stations across 87 markets; delivers nationally-syndicated sports, news, talk, and entertainment programming from iconic brands including the NFL, the NCAA, the Masters, the Olympics, the GRAMMYs, the American Country Music Awards, and many other world-class partners across nearly 8,000 affiliated stations through Westwood One, the largest audio network in America; and inspires listeners through its rapidly growing network of original podcasts that are smart, entertaining and thought-provoking. CUMULUS MEDIA provides advertisers with local impact and national reach through on-air, digital, mobile, and voice-activated media solutions, as well as access to integrated digital marketing services, powerful influencers, and live event experiences.
Basis of Presentation
As previously disclosed, on November 29, 2017 (the “Petition Date”), CM Wind Down Topco Inc. (formerly known as Cumulus Media Inc.), a Delaware corporation (“Old Cumulus”) and certain of its direct and indirect subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief (the “Bankruptcy Petitions”) under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The Debtors’ chapter 11 cases (the "Chapter 11 Cases") were jointly administered under the caption In re Cumulus Media Inc., et al, Case No. 17-13381. On May 10, 2018, the Bankruptcy Court entered the Findings of Fact, Conclusions of Law and Order Confirming the Debtors’ First Amended Joint Chapter 11 Plan of Reorganization [Docket No. 769] (the “Confirmation Order”), which confirmed the First Amended Joint Plan of Reorganization of Cumulus Media Inc. and its Debtor Affiliates Pursuant to Chapter 11 of the Bankruptcy Code [Docket No. 446] (the “Plan”), as modified by the Confirmation Order. On June 4, 2018 (the “Effective Date”), Old Cumulus satisfied the conditions to effectiveness set forth in the Confirmation Order and in the Plan, the Plan was substantially consummated, and Old Cumulus and the other Debtors emerged from Chapter 11. On June 29, 2018, the Bankruptcy Court entered an order closing the Chapter 11 Cases of all of the Debtors other than Old Cumulus, whose case will remain open until its estate has been fully administered including resolving outstanding claims and the Bankruptcy Court enters an order closing its case.
In connection with its emergence, Old Cumulus implemented a series of internal reorganization transactions authorized by the Plan pursuant to which it transferred substantially all of its remaining assets to an indirectly wholly owned subsidiary of reorganized Cumulus Media Inc. (formerly known as CM Emergence Newco Inc.), a Delaware corporation (“CUMULUS MEDIA” or the “Company”), prior to winding down its business. References to “Successor” or “Successor Company” relate to CUMULUS MEDIA on and subsequent to June 4, 2018. References to “Predecessor”, “Predecessor Company” or “Old Cumulus” refer to Cumulus Media Inc. prior to June 4, 2018.
Upon emergence from Chapter 11 on the Effective Date, the Company applied Accounting Standards Codification (“ASC”) 852 - Reorganizations (“ASC 852”) in preparing its consolidated financial statements. As a result of the application of fresh start accounting and the effects of the implementation of the Plan, a new entity for financial reporting purposes was created, and consequently the consolidated financial statements on and after June 4, 2018 generally are not comparable to the consolidated financial statements prior to that date.
The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
In the opinion of management, the Company's unaudited condensed consolidated financial statements include all adjustments of a normal recurring nature necessary for a fair statement of the results for the interim periods presented. The results for the interim periods are not necessarily indicative of those for the full year. The condensed consolidated financial statements should be read in conjunction with our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018.
Revision of Previously Issued Financial Statements
During the third quarter of 2018, the Company determined that it had an error in the classification of certain content related costs in the Condensed Consolidated Statement of Operations disclosed in previous periods. The Company should have presented the amounts within Content costs rather than within Selling, general and administrative expenses. In the accompanying Condensed Consolidated Statement of Operations, the previous period has been revised to correct this misclassification. This reclassification resulted in an increase in Content costs of $4.2 million and a corresponding decrease in Selling, general and administrative expenses for the Predecessor Company period January 1, 2018 through June 3, 2018. The correction was not material to the consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including significant estimates related to revenue recognition, bad debts, intangible assets, income taxes, stock-based compensation, contingencies, litigation, valuation assumptions for impairment analysis, certain expense accruals, leases and, if applicable, purchase price allocations. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances. Actual amounts and results may differ materially from these estimates.
Comprehensive Income (Loss)
Comprehensive income (loss) includes net income (loss) and certain items that are excluded from net income (loss) and recorded as a separate component of stockholders' equity (deficit). During the three and six months ended June 30, 2019 (Successor Company) and periods from January 1, 2018 through June 3, 2018 (Predecessor Company), and June 4, 2018 through June 30, 2018 (Successor Company), the Company had no items of other comprehensive income (loss) and, therefore, comprehensive income (loss) does not differ from reported net income (loss).
Assets Held for Sale
During the year ended December 31, 2015, the Company entered into an agreement to sell certain land in the Company's Washington, DC market ("DC Land") to a third party. The sale is subject to various conditions and approvals, including, without limitation, the receipt by the buyer of certain required permits and approvals for its expected use of the land. There can be no assurance that such sale will be completed in a timely manner, at the original agreed price, or at all.
On April 15, 2019, the Company announced that it had entered into an agreement to sell KLOS-FM in Los Angeles, CA to Meruelo Media ("Meruelo Sale"). On June 27, 2019, the Company announced that it had entered into an agreement to sell WABC-AM in New York, NY to Red Apple Media, Inc. ("WABC Sale"). The Meruelo Sale closed on July 15, 2019. The closing of the WABC Sale is subject to various conditions and regulatory approvals which remain pending. The Company expects the WABC Sale to close within the next twelve months.
The major categories of these assets held for sale are as follows (dollars in thousands):
The following summarizes supplemental cash flow information to be read in conjunction with the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2019 (Successor Company) and Periods from January 1, 2018 through June 3, 2018 (Predecessor Company), and June 4, 2018 through June 30, 2018 (Successor Company):
Six Months Ended June 30,
Period from June 4, 2018 through June 30,
Period from January 1, 2018 through June 3,
Supplemental disclosures of cash flow information:
Income taxes paid
Supplemental disclosures of non-cash flow information:
Transfer of deposit from escrow - WKQX acquisition
Supplemental disclosures of non-cash reorganization items impact on changes in assets and liabilities:
Prepaid expenses and other current assets
Property and equipment
Other intangible assets, goodwill and other assets
Accounts payable, accrued expenses and other liabilities
Cancellation of 7.75% Senior Notes
Cancellation of Predecessor Company Term Loan
Issuance of Successor Company Term Loan
Cancellation of Predecessor Company stockholders' equity
Issuance of Successor Company stockholders' equity
Reconciliation of cash and cash equivalents and restricted cash to the Condensed Consolidated Balance Sheet:
Cash and cash equivalents
Total cash and cash equivalents and restricted cash
ASU 2016-02 - Leases (“ASU 2016-02”). In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, which provides updated guidance for the accounting for leases. This update requires lessees to recognize assets and liabilities for the rights and obligations created by leases with a term longer than one year. Leases will be classified as either financing or operating, thereby impacting the pattern of expense recognition in the statement of operations. In July 2018, the FASB issued ASU 2018-10 - Codification Improvements to Topic 842, Leases ("ASU 2018-10") and ASU 2018-11 - Targeted Improvements ("ASU 2018-11"), which provides technical corrections and clarification to ASU 2016-02. ASU 2016-02 and amendments ASU 2018-10 and ASU 2018-11 will be effective for fiscal years beginning after December 15, 2018, and interim periods thereafter. Early adoption is permitted. The standard requires the application of a modified retrospective approach by either applying the lease standard to each lease that existed at the beginning of the earliest comparative period presented in the financial statements, as well as leases that commenced after that date and recognizing a cumulative effect adjustment for leases that commenced prior to the beginning of the earliest comparative period presented, or applying the standard to the leases that commenced as of the beginning of the reporting period in which the entity first applies the leases standard with a cumulative effect adjustment as of that date. The Company adopted this standard on January 1, 2019 and elected the "package of practical expedients" and as a result did not recast existing leases prior to January 1, 2019. The new lease standard also provides as a practical expedient and an accounting policy election, the option to not separate non-lease components from the associated lease components and instead account for each separate lease component and its associated non-lease components as a single lease component. The Company elected this option both for leases under which it is the lessor and for leases under which it is the lessee.
In adopting the new standard, the Company aggregated and evaluated lease arrangements, implemented new controls and processes, and installed a lease accounting system. Adoption of the new standard resulted in recording operating lease right-of-use assets and operating lease liabilities of approximately $156.1 million and $154.5 million on January 1, 2019. See Note 13 Leases for further information.
ASU 2018-07 - Compensation - Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Payment Accounting (“ASU 2018-07”). The standard aligns the accounting for share-based payment awards issued to employees and non-employees. Changes to the accounting for non-employee awards include: (1) equity-classified share-based payment awards issued to non-employees will now be measured on the grant date, instead of the previous requirement to re-measure the awards through the performance completion date; (2) for performance conditions, compensation cost associated with the award will be recognized when achievement of the performance condition is probable, rather than upon achievement of the performance condition; and (3) the current requirement to reassess the classification (equity or liability) for nonemployee awards upon vesting will be eliminated, except for awards in the form of convertible instruments. The guidance should be applied to all new awards granted after the date of adoption. In addition, the modified retrospective approach should be used on all liability-classified awards that have not been settled and equity-classified awards for which a measurement date has not been established by the adoption date by re-measurement at fair value as of the adoption date with a cumulative effect adjustment to opening retained earnings in the fiscal year of adoption. The standard is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company adopted ASU 2018-07 as of January 1, 2019 and there was no material impact to the Condensed Consolidated Financial Statements.
Recent Accounting Standards Updates
ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”). In June 2016, the FASB issued ASU 2016-13 which requires entities to estimate loss of financial assets measured at amortized cost, including trade receivables, debt securities and loans, using an expected credit loss model. The expected credit loss differs from the previous incurred losses model primarily in that the loss recognition threshold of “probable” has been eliminated and that expected loss should consider reasonable and supportable forecasts in addition to the previously considered past events and current conditions. Additionally, the guidance requires additional disclosures related to the further disaggregation of information related to the credit quality of financial assets by year of the asset’s origination for as many as five years. Entities must apply the standard provision as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for annual periods beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the potential impact of adopting ASU 2016-13 on its Consolidated Financial Statements.
ASU 2018-13 - Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). In August 2018, the FASB issued ASU 2018-13, which eliminates, adds, and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, and interim periods therein, but entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The Company is currently evaluating the potential impact of adopting ASU 2018-13 on its Consolidated Financial Statements.
2. Reorganization Items, Net
In accordance with ASC 852, Reorganization items incurred as a result of the Chapter 11 Cases were presented separately in the Predecessor Company's Condensed Consolidated Statement of Operations prior to the Company's emergence from Chapter 11. For the Predecessor Company periods presented herein, Reorganization items were as follows (in thousands):
Period from April 1, 2018 through June 3, 2018
Period from January 1, 2018 through June 3, 2018
Gain on settlement of Liabilities Subject to Compromise (a)
Fresh start adjustments (b)
Professional fees (c)
Non-cash claims adjustments (d)
Rejected executory contracts (e)
Reorganization Items, net
(a) Liabilities Subject to Compromise have been, or will be settled in accordance with the Plan.
(b) Revaluation of certain assets and liabilities upon the adoption of fresh start accounting.
(c) Legal, financial advisory and other professional costs directly associated with the reorganization process.
(d) The carrying value of certain claims were adjusted to the estimated value of the claim that were allowed by the Bankruptcy Court.
(e) Non-cash expenses to record estimated allowed claim amounts related to rejected executory contracts.
(f) Federal Communications Commission filing and United States Trustee fees directly associated with the reorganization process and the write-off of Predecessor director and officer insurance policies.
During the Predecessor Company periods presented herein, the Company made cash payments of approximately $58.4 million for Reorganization items. Costs incurred as a result of the Chapter 11 Cases by the Successor Company subsequent to its emergence from Chapter 11 are classified as restructuring costs within Corporate Expenses in the Successor Company's Condensed Consolidated Statement of Operations.
3. Acquisitions and Dispositions
Entercom Asset Exchange
On May 9, 2019, the Company completed its previously announced non-monetary exchange with Entercom ("Entercom Swap"). The Company received WNTR-FM, WXNT- AM, and WZPL-FM in Indianapolis, IN and Entercom received WNSH-FM (New York, NY) and WMAS-FM and WHLL-AM (both in Springfield, MA).
The table below summarizes the preliminary purchase price allocation for the Entercom Swap (dollars in thousands):
On June 26, 2019, the Company completed its previously announced non-monetary exchange with Connoisseur Media ("Connoisseur Swap"). The Company received WODE-FM, WWYY-FM, WEEX-AM and WTKZ-AM in and around Allentown, PA and Connoisseur Media received WEBE-FM in Westport, CT, and WICC-AM in Bridgeport, CT.
On a preliminary basis, the carrying value of the assets transferred to Connoisseur Media as part of the Connoisseur Swap was approximately $3.7 million. The Company expects the fair value of assets acquired in the Connoisseur Swap will approximate the carrying value of the assets transferred, with any difference accounted for as a gain or loss on the exchange.
The preliminary purchase price allocation for the Entercom Swap and Connoisseur Swap are based upon the valuation of assets received and the estimates and assumptions used in these valuations are subject to change as the Company obtains additional information during the measurement period, which may be up to one year from the acquisition date. The preliminary and final valuations could be different.
Educational Media Foundation Sale
On May 31, 2019, the Company completed its previously announced sale of six radio stations, WYAY-FM (Atlanta, GA), WPLJ-FM (New York, NY), KFFG-FM (San Francisco, CA), WZAT-FM (Savannah, GA), WXTL-FM (Syracuse, NY), and WRQX-FM (Washington, DC) to Educational Media Foundation for $103.5 million in cash ("EMF Sale"). The Company recorded a gain of $47.6 million on the sale which is included in the (Gain) Loss on Sale or Disposal of Assets or Stations financial statement line item of the Company's Condensed Consolidated Statements of Operations for the three and six month periods ended June 30, 2019.
Revenues are recognized when control of the promised goods or services are transferred to the customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
The following table presents revenues disaggregated by revenue source (dollars in thousands):
The Company provides advertising time in exchange for goods or services such as products, supplies, or services. Trade revenue totaled $10.7 million and $24.0 million for the three and six months ended June 30, 2019 (Successor Company). Trade revenue totaled $3.3 million, $7.7 million and $19.0 million for the period from June 4, 2018 through June 30, 2018 (Successor Company), April 1, 2018 through June 3, 2018 (Predecessor Company) and January 1, 2018 through June 3, 2018 (Predecessor Company), respectively.
The Company capitalizes certain incremental costs of obtaining contracts with customers which it expects to recover. For contracts with a client whose customer life covers a year or less, the Company uses the practical expedient that allows expensing commissions as they are incurred. For contracts where the new and renewal commission rates are commensurate, management uses the contract life for the amortization period. As such, the Company will continue to expense commissions as incurred for the revenue streams where the new and renewal commission rates are commensurate and the contract life is less than one year. These costs are recorded within Selling, general and administrative expenses. The Company does not apply the practical expedient option to new local revenue contracts, because the commission rates for new and renewal contracts is not commensurate and the customer life is typically in excess of one year. As of June 30, 2019, and December 31, 2018, the Company recorded assets of approximately $7.2 million and $6.5 million related to the unamortized portion of commission expense on new local revenue.
Remaining Performance Obligations
The Company has contracts with customers which the Company believes will produce revenue beyond one year. From these contracts, the Company estimates it will recognize approximately $14.4 million of revenue.
5. Restricted Cash
As of June 30, 2019, and December 31, 2018, the Condensed Consolidated Balance Sheets included approximately $2.5 million in restricted cash. Restricted cash is used primarily to collateralize standby letters of credit for certain leases and insurance policies.
6. Intangible Assets
The following table presents the Company's intangible assets as of June 30, 2019 and December 31, 2018 (dollars in thousands):
Balance as of December 31, 2018
Assets held for sale (See Note 1)
Acquisitions (See Note 3)
Balance as of June 30, 2019
(a) Reclassification of leasehold intangibles to right of use assets related to the adoption of ASC 842
The Company's indefinite-lived intangible assets consist of broadcasting licenses and trademarks, while the Company's definite-lived intangible assets consist of broadcast advertising and affiliate relationships.
The Company performs impairment testing of its broadcasting licenses annually as of December 31 of each year and on an interim basis if events or circumstances indicate that broadcasting licenses may be impaired. The Company reviews the carrying value of its other intangible assets, primarily trademarks, broadcast advertising and affiliate relationships for recoverability prior to its annual impairment test and whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Events and circumstances did not necessitate any interim impairment tests during the three and six months ended June 30, 2019.
The Company’s long-term debt consisted of the following as of June 30, 2019 and December 31, 2018 (dollars in thousands):
June 30, 2019
December 31, 2018
Plus: current portion of Term Loan
Total Term Loan
6.75% Senior Notes
Less: unamortized debt issuance costs
Total 6.75% Senior Notes
Long-term debt, net
On the Effective Date, Cumulus Media New Holdings Inc., a Delaware corporation (“Holdings”) and an indirectly wholly-owned subsidiary of the Company, and certain of the Company’s other subsidiaries, entered into the Credit Agreement with the holders of claims with respect to the Predecessor Term Loan under the Canceled Credit Agreement, as term loan lenders. Pursuant to the Credit Agreement, the lenders party thereto were deemed to have provided Holdings and its subsidiaries that are party thereto as co-borrowers with a $1.3 billion senior secured Term Loan.
Amounts outstanding under the Credit Agreement bear interest at a per annum rate equal to (i) the London Inter-bank Offered Rate (“LIBOR”) plus an applicable margin of 4.50%, subject to a LIBOR floor of 1.00%, or (ii) the Alternative Base Rate (as defined below) plus an applicable margin of 3.50%, subject to an Alternative Base Rate floor of 2.00%. The Alternative Base Rate is defined, for any day, as the per annum rate equal to the highest of (i) the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 1/2 of 1.0%, (ii) the rate identified as the “Prime Rate” and normally published in the Money Rates section of the Wall Street Journal, and (iii) one-month LIBOR plus 1.0%. At June 30, 2019, the Term Loan bore interest at a rate of 6.91% per annum.
Amounts outstanding under the Term Loan amortize in equal quarterly installments of 0.25% of the original principal amount of the Term Loan with the balance payable on the maturity date. The maturity date of the Term Loan is May 15, 2022.
The Credit Agreement contains representations, covenants and events of default that are customary for financing transactions of this nature. Events of default in the Credit Agreement include, among others: (a) the failure to pay when due the obligations owing thereunder; (b) the failure to comply with (and not timely remedy, if applicable) certain covenants; (c) certain defaults and accelerations under other indebtedness; (d) the occurrence of bankruptcy or insolvency events; (e) certain judgments against Holdings or any of its subsidiaries; (f) the loss, revocation or suspension of, or any material impairment in the ability to use, any one or more of, any material FCC licenses; (g) any representation or warranty made, or report, certificate or financial statement delivered, to the lenders subsequently proven to have been incorrect in any material respect; and (h) the occurrence of a Change in Control (as defined in the Credit Agreement). Upon the occurrence of an event of default, the Administrative Agent may, with the consent of, or upon the request of, the required lenders, accelerate the Term Loan and exercise any of its rights as a secured party under the Credit Agreement and the ancillary loan documents provided, that in the case of certain bankruptcy or insolvency events with respect to a borrower, the Term Loan will automatically accelerate.
The Credit Agreement does not contain any financial maintenance covenants. The Credit Agreement provides that Holdings will be permitted to enter into either a revolving credit facility or receivables facility providing commitments of up to $50.0 million, subject to certain conditions (see below).
On May 16, 2019, the Credit Agreement was amended to permit the issuance of indebtedness to the extent the proceeds of such indebtedness are used to refinance all or a portion of the Term Loan, subject to certain conditions as described more fully therein.
The borrowers may elect, at their option, to prepay amounts outstanding under the Credit Agreement without premium or penalty. The borrowers may be required to make mandatory prepayments of the Term Loan upon the occurrence of specified events as set forth in the Credit Agreement, including upon the sale of certain assets and from Excess Cash Flow (as defined in the Credit Agreement). On October 11, 2018, the Company purchased $50.2 million of face value of the Term Loan for $50.0 million, a discount to par value of 0.40%. On June 5, 2019, with the proceeds from the EMF Sale and cash on hand, the Company made a $115.0 million voluntary prepayment at par on the Term Loan. On June 26, 2019, the Company used the net proceeds from the issuance of the 6.75% Senior Notes (see below) to make a $492.7 million voluntary prepayment at par on the Term Loan. On July 22, 2019, with the proceeds from the KLOS Sale (see Note 16 - Subsequent Events) and cash on hand, the Company made a $50.0 million voluntary prepayment at par on the Term Loan.
Amounts outstanding under the Credit Agreement are guaranteed by Cumulus Media Intermediate Inc. (“Intermediate Holdings”), which is a subsidiary of the Company, and the present and future wholly-owned subsidiaries of Holdings that are not borrowers thereunder, subject to certain exceptions as set forth in the Credit Agreement (the “Guarantors”) and secured by a security interest in substantially all of the assets of Holdings, the subsidiaries of Holdings party to the Credit Agreement as borrowers, and the Guarantors. As of June 30, 2019, the Company was in compliance with all required covenants under the Credit Agreement.
Revolving Credit Agreement
On August 17, 2018, Holdings entered into a $50.0 million revolving credit facility (the “Revolving Credit Facility”) pursuant to a credit agreement (the “Revolving Credit Agreement”), dated as of August 17, 2018, with certain subsidiaries of Holdings as borrowers, Intermediate Holdings as a guarantor, certain lenders, and Deutsche Bank AG New York Branch as a lender and Administrative Agent.
The Revolving Credit Facility matures on August 17, 2023. Availability under the Revolving Credit Facility is generally determined by a borrowing base formula that is based on 85% of the accounts receivable of the borrowers and the guarantors, subject to customary reserves and eligibility criteria. Under the Revolving Credit Facility, up to $10.0 million of availability may be drawn in the form of letters of credit.
Borrowings under the Revolving Credit Facility bear interest, at the option of Holdings, based on (i) LIBOR plus a percentage spread (ranging from 1.25% to 1.75%) based on the average daily excess availability under the Revolving Credit Facility or (ii) the Alternative Base Rate (as defined below) plus a percentage spread (ranging from 0.25% to 0.75%) based on the average daily excess availability under the Revolving Credit Facility. The Alternative Base Rate is defined, for any day, as the per annum rate equal to the highest of (i) the federal funds rate plus 1/2 of 1.0%, (ii) the rate identified as the “Prime Rate” and normally published in the Money Rates section of the Wall Street Journal, and (iii) one-month LIBOR plus 1.0%. In addition, the unused portion of the Revolving Credit Facility is subject to a commitment fee ranging from 0.250% to